Attorney General Janet Reno decided yesterday it would be a conflict of interest for the Justice Department to investigate how the Clinton White House improperly obtained FBI files and said she wants Whitewater independent counsel Kenneth W. Starr to perform an inquiry.

Reno's announcement was an apparent about-face from her stance just two days ago, when she said she wanted the FBI to carry out a "complete and thorough investigation" into the affair. That prompted howls of protests from Republicans, who said a probe that put the FBI in charge of examining its own actions and those of its political superiors at the White House could never have credibility.

Reno now apparently agrees and said yesterday that she will ask a three-judge panel to broaden Starr's mandate so his office can conduct the inquiry. Starr's office had begun investigating the matter last week but dropped it after concluding it lacked legal authority.

FBI general counsel Howard Shapiro told the Senate Judiciary Committee yesterday that the most recent count of sensitive FBI reports that the White House Office of Personnel Security improperly collected in 1993-94 was 407. The Secret Service said it has "no idea" what list or lists the White House was using in seeking the files.

Anthony B. Marceca, the former White House official who ordered the files, said he believed the Secret Service had provided his office with obsolete computer lists of White House pass-holders. President Clinton and his aides have embraced Marceca's version of events to dismiss the improper possession of FBI files as an apparent "innocent bureaucratic snafu."

But Richard Miller, assistant director of the Secret Service, testified yesterday before the Senate panel that his agency has "to date . . . uncovered no flaws [in its E-Pass or electronic pass-holder system] which would produce an outdated list."

Three Senate Republicans  Christopher S. Bond of Missouri, Richard C. Shelby of Alabama and Charles E. Grassley of Iowa  assailed the White House at a news conference yesterday in light of the reports from the Secret Service, which they have been pursuing for the past week.

"It frightens me to think about the lengths White House officials will go to cover up illegal behavior, as is apparent by the fictitious pass-holder list used by the White House," Shelby, chairman of the Appropriations subcommittee in charge of the Secret Service, declared. "The Secret Service has been falsely accused."

But even as the Secret Service was challenging Marceca's account, another participant in the FBI files affair said the possibility of inaccurate lists was plausible.

Lisa Wetzl, a former official in the personnel security office, said she is the one who first noticed that Marceca had errantly ordered FBI files of people no longer at the White House. The discovery, she said in an interview, came in late 1994 or early 1995 when she took over the assignment  months after Marceca left his job  of updating the files on "holdover" employees who continued to work at the White House after President George Bush left and Clinton arrived. She said she saw that the White House had obtained the FBI file on Bush press secretary Marlin Fitzwater and rapidly concluded that an error had been made.

Speculating on how the mishap occurred, Wetzl said she had seen the Secret Service list that a longtime White House employee, Nancy Gemmell, was using when she started the "Update Project." When Gemmell left her job in August 1993, the task of updating the files fell to Marceca.

Wetzl, who was making her first public remarks about the controversy, said that she is not certain what list or lists Marceca used in obtaining the files but that she is sure that the one Gemmell used contained many names of people who were no longer at the White House. She said she had that list destroyed when she found it at Gemmell's old workstation.

Wetzl, a 25-year-old graduate of the College of William and Mary who now works in the Secretary of the Army's office, said that in her two years at the White House, it wasn't uncommon to come across Secret Service lists that were apparently in error. "I never saw a Secret Service list that was completely up to date," she said. "It was my impression that [the Secret Service] was a bureaucracy like any other."

Congressional Republicans welcomed Reno's decision to give the case to Starr and his Whitewater prosecutors, who are already involved in an investigation of the firings of seven veteran travel office employees. Two of the travel workers were on the list of FBI files sought by the White House.

But some Democrats were less enthusiastic about the involvement of Starr, a Republican who has come under attack from Democrats throughout his long investigation of the Clintons' finances and Arkansas campaigns. Sen. Patrick J. Leahy (D-Vt.) said he did not think the FBI should be investigating itself or the White House but also did not believe Starr was the best alternative.

"He's been partisan in his efforts and he's turned a blind eye to conflicts of interest in his own law practice," Leahy said. He said the Justice Department's Office of Inspector General would have been a better choice.

White House officials insisted they had no advance notice, much less approval, of Reno's decision to call in Starr, and their reaction was mixed.

"Hopefully, it will shut them up," White House press secretary Michael McCurry told reporters. Privately, however, officials said they worried that Starr would not act quickly to resolve the questions, causing the controversy to linger.

Deputy independent counsel John Bates said this would be the office's "second publicly known expansion" of its mandate. The first known expansion came in April, when Starr was given jurisdiction over the dismissals of White House travel office director Billy R. Dale and six co-workers in May 1993. The travel office workers were dismissed after Clinton officials called in the FBI and asked for a criminal investigation of their handling of travel funds. They were eventually cleared of all charges.

Because the improperly collected FBI files included confidential reports on Dale and another travel office employee, Starr had made preliminary inquiries and even taken some grand jury testimony about the files. But he informed Reno on Tuesday that his mandate did not cover how the White House obtained all the FBI papers.

The attorney general immediately ordered the FBI, which had already conducted an in-house inquiry of its own role, to carry on with "a complete and thorough investigation" that would include the White House. After further deliberations, she said yesterday, "I have concluded that it would constitute a conflict of interest for the Department of Justice to investigate a matter involving interaction between the White House and the FBI, a component of the Department of Justice."

Starr's office has 16 full-time lawyers and has been spending more than $1 million a month. Now Starr will have to decide whether he needs to expand his staff again and whether he should set up a separate unit for the files controversy so that the whole office does not get embroiled in it.

The investigation's complexities, and the differing spins that Republicans and Democrats are giving it, were illustrated at yesterday's Senate hearing. Democrats emphasized in various ways a "no harm, no foul" theme, arguing that only FBI summary reports were turned over to the White House and pointing out that apparently nothing was done with the information they contained.

The first panel of witnesses, including Dale, said illusions of confidentiality had been shattered. They said the FBI process requires that they give personal details about their lives, including medical and financial information. The bureau's background investigations are traditionally geared to collect uncorroborated hearsay that the applicant never learns about.

"I find it difficult to believe that this was a low-level bureaucratic mistake," said Dale. He said Craig Livingstone, director of White House personnel security until last week, "in whose possession the file was kept, knew me very well."

Under questioning by committee Chairman Orrin G. Hatch (R-Utah), FBI general counsel Shapiro said "many" of the improperly collected files contained not only summary reports but copies of FBI interviews about those individuals. Half a dozen contained lengthy applications for federal employment, known as Standard Form 86, with all sorts of personal data such as past counseling for drug or alcohol abuse, failure to pay taxes and a catch-all item about anything "embarrassing" in one's past.

For their part, Republicans deplored the credentials of Livingstone and Marceca, the White House investigator who obtained the FBI files for the office on the grounds that the long-gone employees still needed "access" to the White House complex. Both men worked in Democratic presidential primary campaigns together and met again when they worked for Clinton's Inaugural Committee.

"They're two political hacks," Hatch asserted. "There's more than just stupidity here."

Sen. Jon Kyl (R-Ariz.) cited reports that Livingstone once infiltrated Dan Quayle's 1988 vice presidential campaign. Kyl suggested that the committee check into their political activities and find out who at the White House would hire political operatives for such sensitive jobs.

According to the Associated Press, Livingstone, 37, was the subject of a police investigation two years ago when a neighbor in Chevy Chase complained that he threatened to "beat in" her face in a dispute over her barking dog. The police report quoted the neighbor, Barbara Sable, as saying she had "received other threats from Livingstone in the past."